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TURKEY: Lack of franchisee’s independence against the franchisor shall lead the franchise agreement to be called as invalid.

The Turkish Supreme Court’s decision of 25.02.2021 (11th Circuit, E. 2019/1158 K. 2021/1715) states that lack of franchisee’s independence against the franchisor shall lead the franchise agreement to be called as invalid.

Hikmet KOYUNCUOGLU - 15.11.21
Country expert

The merits of the case are as follows.

The franchisor sub-leased the shop to the franchisee without obtaining the approval of the lessor (shopping mall) which shall be obtained according to the lease contract between the lessor and franchisor.

Given the circumstances, apart from the franchise agreement, the franchisor and the franchisee signed an additional protocol, stipulating that the franchisee shall operate under the franchisor’s tax registration, but shall take on all legal responsibilities arising from such operation.

The Supreme Court set forth that the protocol at stake shall be regarded as a fiduciary transaction and shall not prove the independent operation of the franchisee from the franchisor. Thus the Supreme Court ruled that essential element of the franchise relation which is the independent operation of the franchisee from the franchisor is not present in this case and the franchise agreement shall be called as invalid.

 

Hikmet Koyuncuoğlu, IDI Country Expert for franchising in Turkey

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